Correlation Between Fidelity MSCI and Fidelity Covington
Can any of the company-specific risk be diversified away by investing in both Fidelity MSCI and Fidelity Covington at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Fidelity MSCI and Fidelity Covington into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity MSCI Financials and Fidelity Covington Trust, you can compare the effects of market volatilities on Fidelity MSCI and Fidelity Covington and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Fidelity MSCI with a short position of Fidelity Covington. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity MSCI and Fidelity Covington.
Diversification Opportunities for Fidelity MSCI and Fidelity Covington
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fidelity and Fidelity is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity MSCI Financials and Fidelity Covington Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Covington Trust and Fidelity MSCI is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Fidelity MSCI Financials are associated (or correlated) with Fidelity Covington. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Covington Trust has no effect on the direction of Fidelity MSCI i.e., Fidelity MSCI and Fidelity Covington go up and down completely randomly.
Pair Corralation between Fidelity MSCI and Fidelity Covington
Given the investment horizon of 90 days Fidelity MSCI Financials is expected to generate 0.88 times more return on investment than Fidelity Covington. However, Fidelity MSCI Financials is 1.13 times less risky than Fidelity Covington. It trades about 0.09 of its potential returns per unit of risk. Fidelity Covington Trust is currently generating about 0.02 per unit of risk. If you would invest 4,737 in Fidelity MSCI Financials on September 3, 2024 and sell it today you would earn a total of 2,524 from holding Fidelity MSCI Financials or generate 53.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity MSCI Financials vs. Fidelity Covington Trust
Performance |
| Timeline |
| Fidelity MSCI Financials |
| Fidelity Covington Trust |
Fidelity MSCI and Fidelity Covington Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity MSCI and Fidelity Covington
The main advantage of trading using opposite Fidelity MSCI and Fidelity Covington positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity MSCI position performs unexpectedly, Fidelity Covington can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Fidelity Covington will offset losses from the drop in Fidelity Covington's long position.| Fidelity MSCI vs. Fidelity MSCI Industrials | Fidelity MSCI vs. Fidelity MSCI Health | Fidelity MSCI vs. Fidelity MSCI Materials | Fidelity MSCI vs. Fidelity MSCI Consumer |
| Fidelity Covington vs. Fidelity Covington Trust | Fidelity Covington vs. Fidelity Covington Trust | Fidelity Covington vs. Fidelity Covington Trust |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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